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Calm Before The Storm- Watch China

The first week in December of 2010 will go down as probably the quietest week of the year in regard to momentum and price action, and certainly the quietest week following a Non-farm Payroll release that most traders will be able to remember. Fair value has been found in regard to global risk, with speculative interest unable or unwilling to move prices.

The week of heavy consolidation has spanned all asset classes, with equity, commodity, and currency trade sitting in very tight trading channels. Low participation and record investor redemptions from equity markets has lead to most activity coming from high frequency trading algorithms that have generated futures market potential that has not transpired into cash market follow through.

It would seem highly unlikely that the malaise will last through next week because of the amount of fundamental noise coming across the mainstream wires. These include Chinese interest rate rumors along with a swath of releases that will be released at 21:00 ET on Friday evening after the markets are closed, which will be followed by CPI, interest rate statements, confidence numbers, employment, and surveys from all major regions that will undoubtedly move prices.

The last week of trade really may be the calm before the storm in regard to volume, momentum, and year-end moves. Signals will flow from Sunday night, in-line with price action increasing.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.